Frequently Asked Questions CFPB’s TILA-RESPA Integrated ...

Frequently Asked Questions

CFPB's TILA-RESPA Integrated Disclosure (TRID) Rule

To use the index, click on a topic below to be taken to that topic location in the document.

Section 1: Section 2: Section 3: Section 4: Section 5: Section 6: Section 7: Section 8: Section 9: Section 10: Section 11: Section 12: Section 13:

General Questions Exempt Transactions Loan Estimate (LE) 3-Day Review Period Closing Disclosure (CD) Communicating with Creditors Owner's Title Insurance Premium Seller Simultaneous Issue APR Day of Consummation Post-Closing Industry Issues

The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Old Republic National Title Insurance Company does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

September 16, 2015

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Frequently Asked Questions

CFPB's TILA-RESPA Integrated Disclosure (TRID) Rule

Old Republic Title offers customized PowerPoint presentations for our agents so that you can "Show What You Know" to your lender and real estate agent clients. We have information, guidance and materials available for you to be a knowledgeable resource for your customers. The following are what we have found to be commonly asked questions from "Show What You Know" and other TRID training to help you prepare for TRID implementation.

Note: The terms creditor and lender are used interchangeably in this document.

Section 1: General Questions

Do the provisions of the new Rule apply to private lenders?

The answer is yes and no.

There are two new Rules private investors must understand; first is the TILA-RESPA Integrated Disclosure (TRID) Rule and second is the Loan Originator (LO) Act.

The TRID Rule has an exemption for any lender making five or fewer loans per year. As an example, if it is a simple seller take-back or a parent/child transaction the TRID Rule will not apply; however, the LO Act may make this type of loan difficult to make. The LO Act can be found at .

Is it likely that the form will have revisions before implementation?

The main issue that remains is the way we are directed to disclose the title premiums. This required calculation renders the CD inaccurate in 21 states where the seller pays the Owner's Title Policy premium. And in most other states where premiums are filed, published or promulgated, the disclosure requirement may violate state insurance rules or codes. It does not seem likely that the CFPB will correct the issue anytime soon.

Are lenders allowed to use the form prior to October 3, 2015?

Lenders are not permitted to supply this form to consumers prior to implementation, which is with loan applications taken on or after October 3, 2015. We should start teaching our staff about the form now so that they can become educated and in turn we should start educating our business partners.

The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Old Republic National Title Insurance Company does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

September 16, 2015

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Do the provisions of the Rule apply to second mortgages? Yes. There is actually an example of a form in the Rule showing that the proceeds from the second mortgage are brought over to Section L of the Closing Disclosure (CD) for the first mortgage.

Does the Rule apply to five-year residential loans?

The provisions of the Rule apply to most closed-end residential mortgages. Within the Rule there is a discussion as to why the CFPB decided to include two-year temporary construction loans so depending on the type of loan to which you are referring, the Rule may apply.

Does the form and related requirements apply to second homes and investment properties with 1-4 family units?

Yes it does if the property is deemed "residential" by the lender.

Service Provider Lists If the creditor/lender requires a service only because it was mentioned in the Contract for Sale, does it trigger the creditor/lender's need to supply a list of service providers for that service? CFPB's verbal response was, "yes." If the creditor/lender includes the requirement on their commitment, then it is deemed a loan requirement and the lender must comply with providing a list of service providers for that service. We asked, "what if the creditor/lender includes a simple requirement that the consumer must meet all of the requirements of the Contract of Sale but does not mention any specific services?" The CFPB representative said, "Nice try." He went on to explain that it doesn't matter how the creditor/lender learned about the service requirements or how it's worded on the commitment, they must comply with the additional provisions of the Rule if their loan is conditioned on meeting the requirement.

Example: If the Contract of Sale requires the consumer to purchase a home inspection and then the creditor/lender mentions it directly or indirectly in the loan commitment, the creditor/lender must supply a provider list of home inspector(s).

Section 2: EXEMPT TRANSACTIONS

What types of transactions are exempt from the requirements of the new Rule?

HELOC, reverse mortgages, loans made by creditors making five or fewer loans per year (but they still have to deal with the Loan Originator (LO) Act), cash, commercial purpose loans, mobile home loans and no-interest second mortgages made for down payment assistance, and energy efficiency or foreclosure avoidance are all exempt. Most every other residential 1-4 family dwelling closed-end mortgage falls within the scope of the Rule.

The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Old Republic National Title Insurance Company does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

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I have a client who makes several purchase-money loans each year to investors who purchase residential properties for repair/improvement and resale. Will the client's lending activities fall under the Rule?

The Rule specifically exempts lenders who make fewer than five loans per year; however, your client will fall under the onerous Loan Originator Rule if the loans are for residential purposes.

The Loan Originator Rule can be found at .

How will the Rule affect commercial transactions? Under the Rule, will we be required to have two separate and distinct sets of forms between commercial transactions and residential transactions?

Commercial transactions do NOT fall under the provisions of the Rule. The form used for commercial transactions will most likely be dictated by the lender; however, check with your software provider to make certain that the current-HUD-1 and the ALTA Settlement Sheet will be on your system for your use with exempt transactions.

A lender asks if an investor (under a company name) who buys and sells houses is subject to follow the Rule. The investor finances the purchases with a bank loan, rehabilitates the residential property and then sells the property. Would this be considered commercial as long as the investor would not be living in the property as a residence but simply buys and sells it? In this scenario it would be considered commercial and exempt from the Rule, correct?

We should not opine on whether a property is considered commercial or residential. The definition of commercial follows other banking rules; the creditor will make that decision as to whether the transaction is exempt or not. There are different standards when it comes to multi-family dwellings as compared to single family homes and the investor should ask the lender's compliance department to be certain. Please also do not forget about the Loan Originator Act when it comes to individual lenders.

If a creditor/lender on a commercial transaction requires a mortgage on one of the parties' residences, does that mortgage fall under the provisions and requirements of TRID? This was verbally answered by a CFPB attorney who said that as long as the "primary" purpose of the mortgage on the residential property is NOT for "personal, family or household purposes," it does not fall under the provisions of TRID.

Are transactions involving loans of 25 acres or more, construction-only loans and vacant land loans covered by TRID?

Yes. While these loans are currently exempt from mortgage disclosure requirements under RESPA and Regulation X, the TRID Rule includes them depending on the primary purpose of the

The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Old Republic National Title Insurance Company does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

September 16, 2015

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loan. The loan is included as a "consumer credit transaction" if the money, property or services is used primarily for personal, family or household purposes and the debt is secured by a closed-end transaction secured by real property.

The CFPB believes that covering all real estate-secured closed-end consumer credit transactions (other than reverse mortgages) would eliminate the guess work for lenders as to which loans are covered and which loans are exempt while providing consumers with the best information available to make their decisions.

Section 3: LOAN ESTIMATE (LE)

Does this replace the Truth in Lending (TIL) Disclosures?

For covered transactions, yes. There is a Part A to the new form called the Loan Estimate (LE) that replaces the early TIL and the Good Faith Estimate (GFE). Part B, the Closing Disclosure (CD) replaces the final TIL and the HUD-1

May lenders charge for pre-approvals and when is the application fee charged?

The lender may not charge anything at the time of loan application except a reasonable credit report fee. The lender may not delay the delivery of the LE once the six elements that define an application are received. After delivery of the LE and after the consumer gives an indication that he/she wants to proceed with the loan, the lender may charge additional fees.

The Rule states: "Limitation on fees. Consistent with current law, the creditor generally cannot charge consumers any fees until after the consumers have been given the Loan Estimate form and the consumers have communicated their intent to proceed with the transaction. There is an exception that allows creditors to charge fees to obtain consumers' credit reports." This provision is in ? 1026.19(e)(2)(i).

A lender asks would it be possible to have an explanation for the "last day the creditor may revise Loan Estimate (LE) from contract info?"

The creditor must ensure that the consumer receives the revised LE no later than four business days prior to consummation. If the creditor is mailing the LE and relying upon the "mailbox rule," the creditor would need to place the LE in the mail no later than seven business days before consummation of the transaction to allow three business days for receipt. ? 1026.19(e)4 If there are fewer than four business days in between the time the revised LE would have been required to be provided to the consumer and consummation, creditors may provide consumers with a Closing Disclosure (CD) reflecting any revised charges resulting from the changed

The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Old Republic National Title Insurance Company does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

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circumstance and rely on those figures (rather than the amounts disclosed on the LE) for purposes of determining good faith and the applicable tolerance. (Comment from 19(e)(4)(ii)-1) What are the six elements that trigger a loan application has been received and then requires the lender issue the Loan Estimate (LE) within three business days?

Address of Property Loan amount sought Income Estimated Value Name Social Security Number

Since Washington DC likes acronyms so much, you can easily remember the six elements by its acronym = A.L.I.E.N.S.

Section 4: 3-DAY REVIEW PERIOD

After reading more on the Closing Disclosure (CD): Does the three-day time period also apply to the closing documents from the lender or is it just the Closing Disclosure (CD)? If the closing is mailed away, we usually need the package ready several days before closing. Will the three-day time period apply three days before we need the package to send out or is it still three days before closing?

The CD is the disclosure document required to be delivered prior to closing not the entire closing package. Therefore you are going to have to do what you are likely doing now: stay in close communication with the lender in order to get everything you need when you need it.

What determines whether the Closing Disclosure (CD) form was delivered three days in advance?

The lender is responsible for the delivery of the CD but the Rule allows the lender to designate another party to handle the delivery. Because the requirement is so strictly defined and the penalties so severe, it is believed that most lenders will make the delivery and not allow another party to deliver. We, as the closing industry, are not responsible to "police" the delivery but need to be cautious if we hear something contrary to the Rule. With regard to the specifics of calculating the three day advance disclosure requirement, the mailing rule and the definition of business day come into play. If the CD is not hand-delivered (or delivered in a manner that affirmatively confirms delivery to the consumer) then an additional three days are added to the time period. This is the case even if the document is sent electronically (and for all practical purposes is almost always transferred to the recipient's inbox instantaneously). The definition of a "business day" as it applies to the delivery of the CD differs from the definition used for the delivery of the Loan Estimate (LE). A business day for CD purposes is all calendar days other

The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Old Republic National Title Insurance Company does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

September 16, 2015

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than Sundays and the 10 federal holidays. Therefore, Sundays and the 10 federal holidays must be removed from the count. If you do not hand deliver the CD, the time period will most typically expand to seven days in advance of closing (three days in transit, three days for review plus one Sunday or federal holiday when applicable).

Does the borrower receive the Closing Disclosure (CD) three days in advance or at closing?

The borrower (now called the Consumer) MUST receive the final CD at least three business days in advance of closing or we may not close. The lender is responsible and liable for the delivery but we will need to supply our fees, adjustments and invoices to the lender well in advance if the lender is going to input the numbers. We need to create processes within our operations to supply the numbers at least seven days in advance so that the lender may complete the form and meet the delivery requirement. See prior answer for more on this issue.

I thought that the whole process was that NOTHING changed after the delivery of the Closing Disclosure (CD).

You are thinking of the original proposal by the CFPB in the draft of the Rule. Because of the American Land Title Association's (ALTA) massive effort (along with the help of a number of our related industry professionals) to convince the CFPB that delaying closing for minor changes would cause chaos and harm both buyer and seller, the final Rule states that under only three circumstances will the three-day review period be re-triggered.

Does the three-day review period retrigger mean that the loan has to be reapproved? What are the three changes that would cause a re-triggering of the three-day review period?

It is possible since the three triggers for re-disclosure and a new three-day waiting period are major occurrences the loan will have to go back to underwriting. The three instances where a new review period is required are:

1) If a pre-payment penalty is added, 2) If the loan product changes, or 3) If the APR increases beyond the allowable limit.

Do the regulations in the Rule affect the three-day right of rescission on refinances or do the borrowers get three days prior to signing plus three days after?

The three-day right of rescission does not change with the new Rule. Therefore the consumer will have three days prior to consummation to review the fees, terms and charges and three days after consummation to reconsider the entire loan offering.

If a consumer writes a statement specifically waiving their right to the three-day review is there a provision to allow for this?

The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Old Republic National Title Insurance Company does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

September 16, 2015

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There is a provision in the Rule stating that the borrower can waive the three-day waiting period after they receive the Closing Disclosure (CD) or the revised CD ONLY if the borrower has a Bona Fide Personal Financial Emergency. The phrase is undefined but they give one example, "[t]he imminent sale of the consumer's home at foreclosure, where the foreclosure sale will proceed unless loan proceeds are made available to the consumer during the waiting period, is one example of a bona fide personal financial emergency." This is a very high bar to set and within the Rule the CFPB is concerned about expanding the use of waivers fearing that any expansion will lead to abuse. This waiver request must be in writing and must provide details for the basis of the request. It will be up to the lender to determine if a waiver will be permitted. A borrower may not waive the review period on behalf of the seller.

Someone read that it is up to the lender whether or not they would need to redisclose the Closing Disclosure (CD).

The need to re-disclose and the retriggering of the three-day review period depend on the reason for which the credit/adjustment is required. If it is a credit that MAY affect the value or a credit on which the appraiser must opine then the Equal Credit Opportunity Act (ECOA) may be triggered which requires the delivery of the final appraisal to the consumer three business days prior to consummation. Therefore, if the appraisal must be rewritten and re-delivered we MAY have to give the consumer three days to review the revised appraisal. Many small items affect the appraised value and it is in those circumstances where the creditor may need to stop the closing.

How do I handle the situation if the consumer states that they never received the Closing Disclosure (CD)?

Simply call the lender and tell them the consumer states that they did not receive the CD in advance and then inquire if the lender would like you to proceed. Remember, if the lender used the "mail-box method" of delivery (either mailing or emailing the CD seven days in advance); there is a presumption in the Rule that the consumer received the CD without requiring proof of receipt. Therefore, it is entirely possible that the lender met its obligation but the CD got lost in the mail/email.

Section 5: CLOSING DISCLOSURE (CD)

There are challenges with the real property taxes on the Closing Disclosure (CD). It seems clear if the lender requires the current year's taxes be paid in advance yet the taxes are not yet due from the seller in a sale transaction, the taxes are reflected in Section F (Prepaids). If it is a property tax lien recorded against the property for back taxes owed by the seller, it is reflected in Section N (due from seller at closing).

The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Old Republic National Title Insurance Company does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

September 16, 2015

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